Interest on capitalised costs of credit, and the sanction of free credit | In Principle

Following the high-profile judgment of the Court of Justice of 13 February 2025 in C-472/23, Lexitor, the issue of the sanction of “free credit” has become more and more dynamic. In that judgment, the Court of Justice did not address the legality of charging interest on capitalised costs of credit, i.e. charging interest also on the portion of the loan drawn down but earmarked for payment of the costs of issuing the loan (e.g. commissions). This issue will be addressed by the Court of Justice in subsequent cases where Polish courts have decided to seek preliminary rulings.

Requests for preliminary rulings have been filed with the Court of Justice of the European Union by the District Court for Łódź-Śródmieście (C-566/24, Helpfind Recovery) and the Włodawa District Court (C-744/24, Bank Pekao).

In those cases, the Court of Justice will assess the charging of interest on capitalised credit costs in light of Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers.

Polish courts have taken the lenders’ view

These cases before the Court of Justice will have a major impact on future rulings in Poland and on the sanction of “free credit” as such. Nonetheless, we should not overlook the existing jurisprudence from the Polish courts, which have frequently taken a position advantageous for lenders.

In addition, the Poznań Regional Court has submitted questions on key legal issues surrounding application of the sanction of free credit to the Supreme Court of Poland (case no. III CZP 3/25). Regardless of the case law from the CJEU, the future resolution by the Supreme Court will also exert a major influence on litigation over the sanction of free credit.

It should be pointed out that the Supreme Court previously addressed the possibility of charging interest on the portion of credit earmarked for financing the costs of the credit. In its order of 15 June 2023 (case no. I CSK 4175/22), the court held: “If the agreement is structured in this way, and the borrower agrees to these conditions and decides to pay the origination fee not by transferring it from the borrower’s own funds, but out of the funds which the bank has agreed to make accessible, the funds applied to this purpose of the borrower increase the borrower’s credit indebtedness, which is to be repaid in accordance with the schedule and charged with the interest agreed by the parties.”

Some Polish lower courts have decided this issue on their own. In the judgment of 5 December 2024 (case no. II Ca 1590/24), the Kielce Regional Court held that it “does not share the plaintiff’s position on the impermissibility of charging interest on the capitalised costs of the credit in consumer credit agreements. There is no statutory provision excluding charging such interest. … If obtaining the credit is tied to incurring additional costs, such as commissions, origination fees etc, and the borrower does not have the funds to cover them or does not wish to do so out of their own funds, such amounts may also be made available by the lender, i.e. loaned. In that situation as well, the borrower is using someone else’s capital, and the lender is authorised to collect interest on this basis if both parties mutually declare this intention in the agreement. This is a reasonable solution, economically justified, essentially falling within the contractual relationship and not infringing the principle of freedom of contract (Civil Code Art. 353 §1 and 353¹). … Contrary to the plaintiff’s argument, this possibility of charging interest on the capitalised costs of the credit (e.g. commissions) is not precluded by the Consumer Credit Act of 12 May 2011 or Directive 2008/48/EC … implemented therein. It does not follow from these laws that interest can be collected only on the amount made available to the consumer for his or her own purposes (unrelated to financing of the granting of credit), i.e. solely on the total amount of credit, which under Art. 5(7) of the Consumer Credit Act is the maximum amount of all funds not including the capitalised costs of the credit, which the lender makes available to the consumer under the credit agreement, or in the case of an agreement for which such a maximum amount is provided, the sum of all funds not including the capitalised costs of the credit, which the lender makes available to the consumer based on the credit agreement (defined by Art. 3(l) of the directive as ‘the ceiling or the total sums made available under a credit agreement’).”

The court backed its analysis with an extensive historical interpretation of Art. 5(10) of the Consumer Credit Act. Significantly, a change in the wording of this provision indicates that allowing interest to be charged on capitalised costs was a deliberate move by the parliament.

In turn, in the judgment of 7 April 2025 (case no. V Ca 3280/24), the Warsaw Regional Court correctly pointed out that Art. 45(1) of the Consumer Credit Act, concerning the sanction of free credit, must be construed narrowly because it is an exceptional provision: “The interpretation of Art. 45(1) cannot lead to expansion of the sanction of free credit to cover instances of infringements that were not clearly indicated there. Contrary to the plaintiff’s suggestions, consumer protection—however special and however much a priority—cannot lead to an interpretation contra legem, conflicting with the principle of legal certainty and the equilibrium between the parties to the contractual relationship.”

Various district courts have also taken a similar view. As the Częstochowa District Court held in its judgment of 7 April 2025 (case no. I C 1176/24): “The permissibility of charging interest on the capitalised costs of credit is not precluded by the Consumer Credit Act nor by Directive 2008/48/EC implemented therein.”

And the Pisz District Court held in its judgment of 29 April 2025 (case no. I C 145/25): “In this instance, if the parties have so provided in the agreement, the lender has the right to charge interest on the amounts allocated (credited) by it to the costs of the credit, from which the borrower benefits (Civil Code Art. 359 §1). This possibility of collecting interest on the capitalised costs of the credit (e.g. commissions) is not precluded by the Consumer Credit Act nor by Directive 2008/48/EC implemented therein. … It does not follow from these laws that interest can be collected only on the amount made available to the consumer for his or her own purposes (unrelated to financing of the issuance of credit), i.e. solely on the total amount of credit. … Thus, neither a literal reading of the cited regulations, nor a systemic interpretation thereof, argues in favour of restricting the possibility of charging interest solely to the total amount of credit. Excluding this possibility in the case of consumer credit would require an express statutory provision, but there is none. Neither does a purposive interpretation justify a ban on providing in the agreement for interest on capitalised costs of the credit.”

Summary

Although the reasoning from the Polish lower courts cited above has a justified legal basis—on both systemic and axiological grounds—it can hardly be said for now that there is a uniform line of judicial holdings on this issue.

Opposing positions also crop up, rejecting these arguments. Thus it will be necessary to wait for a definitive resolution on the permissibility of charging interest on capitalised costs of credit (and the ability to apply the sanction of free credit in this instance) until rulings are issued by the Court of Justice and the Supreme Court of Poland.

Mateusz Kosiorowski, adwokat, Dispute Resolution & Arbitration practice, Klaudiusz Mikołajczyk, Banking & Project Finance practice, Wardyński & Partners